January 2024

The National Association of Realtors published a 2024 Housing Market Forecast that provides insight into expectations of what will happen in 2024. Key takeaways:

Mortgage Rates – expected to decline. The report says year-end rates should decline by one percentage point, from 7.4% to 6.5%. The national average published by FreddieMac shows rates declined from a peak of 7.8% in late October to 6.6% at year-end. I expect further rate cuts by the Federal Reserve that will help push mortgage rates to near 6.0% levels by year-end.

Home Prices – expected to dip 1.7%. On a national level, they expect median price will slightly exceed the 2022 annual median. They forecast that home prices in the San Jose-Sunnyvale area to rise by 3.1%. The 2023 annual median price for Silicon Valley homes declined by 3.6% from 2022, yet was 3% higher than 2021 and 23% higher than 2020. I expect the median price to rise to or slightly higher than 2022.

Housing Inventory – forecasted to decline by 14.7%. Homeowners delay listing their homes due to the “lock-in effect”. This is due to the size of the gap between their existing mortgage rate (most under 4%) and the current rate (~6.5%). Silicon Valley’s supply of new listings is 23% lower than the 2014-2020 average.

National Housing Outlook